威利斯2021年上半年全球再保险市场报告（英）-29页_4mb

Reinsurance Market Report Summary - Half-Year 2021

Core Content

The Willis Re Reinsurance Market Report for the first half of 2021 highlights the recovery and performance of the global reinsurance industry, particularly focusing on capital growth, underwriting performance, and investment returns.

Main Findings

Capital Growth

• Total Reinsurance Dedicated Capital: Reached USD 688B at the end of the first half of 2021, up 4% from the restated USD 659B at year-end 2020.
• INDEX Companies: Capital increased by 4.7% to USD 575B, driven by strong net income and equity market performance.
• Alternative Capital: Also grew by 4.4%, aligning with the growth of INDEX companies.
• Other Reinsurers: Experienced a slight decrease in capital, primarily due to lower equity holdings and reduced investment returns.

Return on Equity (ROE)

• Reported ROE: Rose from -0.7% in 2020 to 13.9% in 2021 HY, matching the 2019 HY level.
• Underlying ROE: Improved from 2.7% to 6.3%, primarily due to better investment returns and underwriting performance.
• Underlying ROE Ex-Investment Gains: Remained below the industry's cost of capital, at 6.3% compared to a WACC of ~7%.

Premium Growth

• Premium Growth: The SUBSET companies reported an average 15% increase in net earned premium, the strongest since at least 2015.
• Drivers of Growth: Price increases at both primary and reinsurance levels, along with a rebounding global economy and increased exposure.
• Premium vs. Exposure: Growth was roughly split as one-third price and two-thirds exposure.

Combined Ratio

• Reported Combined Ratio: Improved to 94.1%, returning to pre-COVID levels.
• Underlying Combined Ratio: Continued to improve, reaching 98.4%, up slightly from 98.6% in 2020 HY.
• Impact of Catastrophes: Natural catastrophe activity was high, but reserve releases and rate increases helped reduce the combined ratio.

Expense Ratio

• Expense Ratio: Continued to decline, reaching 29.6% in HY 2021, the lowest since 2013.
• Premium vs. Expense Growth: Premiums grew 15% while expenses grew only 10%, contributing to a lower expense ratio.

Investment Performance

• Investment Yield: Improved significantly, driven by strong equity markets and investment gains.
• Running Yield: Increased to 2.4%, despite historically low interest rates.
• US and Bermudan Companies: Recorded the highest investment yields due to accounting policies that include unrealized equity gains in their income statements.

Key Information

Capital Retention

• Reinsurers retained more capital than in recent years, with less than half returned to shareholders, likely due to the positive rating environment and focus on organic growth.

Natural Catastrophe Impact

• Natural catastrophe losses were a significant factor in the combined ratio, but the underlying ratio improved due to better underwriting and investment returns.

Regulatory Influence

• Some European regulators imposed restrictions on dividend payments and buy-backs in 2020, which may have influenced lower payouts in 2021.

Investment Composition

• Companies with higher equity holdings saw greater capital growth, while those with higher debt holdings faced unrealized losses due to rising bond yields.

Market Trends

• The ILS market, particularly the cat bond market, continued to develop, with increased investor interest.
• The trend of reserve releases supporting combined ratios has been declining since 2016, with a notable exception in 2021 HY.

Summary Table

Conclusion

The reinsurance industry showed resilience and recovery in the first half of 2021, with strong capital growth and improved underwriting performance. Despite these improvements, underlying ROE and combined ratios still face challenges due to the industry's cost of capital and ongoing natural catastrophe activity. Investment gains and equity market performance were key contributors to the overall positive results.